The Reserve Bank said it will reconstitute the oversight committee (OC) under its aegis to operationalise the banking ordinance for resolving the issue of bad loans that have soared to over Rs 8 lakh crore, reported PTI.
The central bank said it has been decided to reconstitute the OC under the aegis of the central bank and also proposed to enlarge the committee to include more members so that it can constitute requisite benches to deal with the volume of cases referred.
The existing OC, which has two members, was constituted by the Indian Banks' Association (IBA).
Outlining the action plan to implement the Banking Regulation (Amendment) Ordinance, 2017, the RBI said it is also working on a framework to facilitate an "objective and consistent" decision-making process for cases that may be referenced for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC).
The Reserve Bank, in a statement, said it has already sought information on the current status of the large stressed assets from the banks.
"The RBI would also be constituting a committee comprised majority of its independent board members to advise it in this matter," it added.
The ordinance authorises the RBI to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the IBC.
It has also empowered the RBI to issue directions to banks for resolution of stressed assets.
The RBI further said it envisages an important role for the credit rating agencies in the scheme of things and, "with a view to preventing rating-shopping or any conflict of interest, is exploring the feasibility of rating assignments being determined" by the RBI itself.
Agencies would be paid for from a fund to be created out of contribution from the banks and the Reserve Bank.
The RBI further said the proper exercise of the enhanced empowerment would require coordination with and cooperation from several stakeholders including banks, ARCs, rating agencies, IBBI and PE firms. It would be holding meetings in the near future with these stakeholders.